Court Orders Resumption of Tender Proceedings, Citing Lack of Legitimate Grounds for Cancellation
In a significant ruling, the Jammu & Kashmir and Ladakh High Court has quashed the cancellation of a tender process initiated by the Public Works Department (R&B) in the Union Territory of Jammu and Kashmir. The court, presided over by Justice Sanjay Parihar, found the cancellation of the tender process after the opening of financial bids to be arbitrary and lacking in bona fide reasons.
The case involved the petitioners, Iftekhar Hussain Shah and others, who challenged a corrigendum issued on September 11, 2025, which annulled the tender process for 39 civil works listed under a previous notification. The petitioners had emerged as the lowest bidders (L-1) in the financial bids, leading to their legitimate expectation of being awarded the contracts.
The respondents, including the Executive Engineer of PWD (R&B) Division, cited the need for wider participation and competitive rates as reasons for the cancellation. They argued that the rates received were only about 3% below the advertised rates, whereas previous tenders had achieved rates approximately 23.77% below. Additionally, several bidders had been disqualified due to non-compliance with a new requirement to link bank accounts with their GSTIN, prompting complaints and calls for a re-tendering process.
However, the court found these justifications unsatisfactory. Justice Parihar noted that the tender process had already demonstrated substantial competition with 86 technically qualified bidders for the works in question. The court emphasized that while the authority retained the right to cancel the tender process under Clause 27 of the Standard Bidding Document, such power must be exercised fairly, without arbitrariness, and in the public interest.
The judgment highlighted that the reasons provided by the respondents did not align with the tender document or demonstrate a rational basis for the cancellation. The court also pointed out the implications for competitive bidding, as financial bids had already been disclosed, affecting the integrity of the process.
In its order, the court directed the resumption of the tender process from the stage it was halted, ensuring transparency and adherence to the terms of the Standard Bidding Document. The court clarified that the judgment does not guarantee the award of contracts to any specific petitioner but mandates a fair and unbiased assessment of bids.
This ruling underscores the judiciary's role in maintaining fairness and accountability in public procurement processes, ensuring that administrative discretion is exercised within constitutional bounds.
Bottom Line:
Tender Process - Cancellation of a tender process after opening of financial bids must satisfy the principles of fairness, non-arbitrariness, and bona fide exercise of administrative discretion. The reserved power of cancellation cannot be employed arbitrarily or for the purpose of providing a fresh opportunity to non-responsive bidders.
Statutory provision(s): Article 14 of the Constitution of India, Clause 27 of the Standard Bidding Document, J&K PWD Engineering Manual, 2020
